China’s recovery sputters as consumption and output lose steam in July

China’s economic recovery just hit a wall. July data reveals a broad-based slowdown across nearly every major indicator, with industrial output, retail sales, and investment all coming in weaker than expected. Industrial output grew just 4.5% year-on-year in July, down from 5.3% in June and below the 4.8% that analysts had penciled in. Retail sales were even more disappointing, crawling up a mere 0.6% compared to 1% the prior month, badly missing the 1.5% consensus forecast. The numbers tell a grim story The July figures land on top of an already shaky foundation. Second-quarter GDP growth came in at 4.3% year-on-year, the weakest pace in roughly three-and-a-half years and below the government’s 4.5-5% target range. Fixed-asset investment contracted 6.7% over the first seven months of 2026. Analysts had expected a 6% decline. The property sector continues to act as an anchor dragging the broader economy down. New home prices fell 3.2% year-on-year in July, extending a decline that has persisted for years at this point. Housing has historically been the single largest store of household wealth in China, and falling prices create a feedback loop: consumers feel poorer, so they spend ...